A Study On The Equity Pledgeof Controlling Shareholders,Institutional Environment And The Quality Of Information Disclosure

In recent years,the act of equity pledge has become more and more common in the capital market of our country.According to statistics of China Securities Depository and Clearing Co.,Ltd.,by the end of December 2019,3081 listed companies in Shanghai and Shenzhen had pledged their shares,with the number of Pledged Shares of 580.629 billion,accounting for 10.48% of the total share capital of the pledged companies.Because of the characteristics of low cost,high efficiency and large amount of financing,equity pledge financing has become an important financing method for controlling shareholders of listed companies,which eases the financing constraints.However,the risk of equity pledge also appears.After the controlling shareholders pledge their equity,in order to avoid the risk of forced transfer of control right caused by the decline of stock price,the controlling shareholders have the motivation to use the control right to manipulate the information disclosure of listed companies for market value management,affect the investment decision of external investors,and achieve the purpose of stabilizing the stock price.Since any operationand management activities of listed companies are based on the institutional environment,it shows that the manipulation of information disclosure caused by the pledge of controlling shareholders' equity is likely to be affected by the development level of the institutional environment.Therefore,it is of theoretical and practical significance to study the stock pledge,institutional environment and information disclosure quality of controlling shareholders in the same framework.Firstly,this paper combs the relevant research results of equity pledge,institutional environment and information disclosure quality,and summarizes the previous research experience.Secondly,based on the relevant theoretical basis,this paper analyzes the relationship between equity pledge,institutional environment and the quality of information disclosure,and puts forward the corresponding research hypotheses.Then,select A-share listed companies of Shenzhen Stock Exchange as samples with a time span of 2014-2018,construct OLS regression model for empirical analysis,and the empirical results verify the hypothesis proposed in this paper and pass the robustness test.At last,the conclusion of this paper is summarized and some policy suggestions are put forward.According to the empirical results,we can draw the following conclusions:(1)the quality of information disclosure of listed companies will decrease when the controlling shareholders pledge their shares,and the higher the proportion of the controlling shareholders pledge,the worse the quality of information disclosure.(2)Compared with the state-owned listed companies,the negative impact of the controlling shareholders' equity pledge on the quality of information disclosure is stronger in the non-state-owned listed companies.(3)Between the institutional environment and the quality of information disclosure,there is a positive correlation.The better the institutional environment of the region where the listed companies are located(the higher the degree of marketization,the less government intervention and the higher the level of legal system),the higher the quality of information disclosure of the listed companies.Further analysis shows that the improvement of institutional environment can alleviate the negative impact of controlling shareholders' equity pledge on the quality of information disclosure of listed companies.Combined withthe research conclusion,the following policy suggestions are put forward: regulatory agencies should regulate the disclosure of stock pledge information and strengthen supervision;listed companies should improve internal governance and pledgees should strengthen their external supervision of listed companies;the government needs to expand the financing channels of listed companies to alleviate financing difficulties;the government should improve the institutional environment and establish a good external governance mechanism,which includes improving the degree of marketization,reducing government intervention and improving legal system.